NATIONAL ICT CONVENTION 23-25 March 2004

NATIONAL ICT CONVENTION

23-25 March 2004

Dennis KabaaraCEO, Institute of Economic Affairs – Kenya

23 March 2004, Safari Park Hotel

“Top-Down” or “Bottom-Up”?Locating ICT Strategy in Kenya’s Growth, Equity

& Poverty Reduction Agenda

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Institute of Economic Affairs - Kenya-Institute of Economic Affairs Kenya

PART I: ICT IN ECONOMIC GROWTH& DEVELOPMENT CONTEXT

PRESENTATION OUTLINE

PART II: ICT AND KENYA’S GROWTH, EQUITY & POVERTY REDUCTION AGENDA

PART III: TOWARDS AN ICT-ENABLED GROWTHAND HUMAN DEVELOPMENT FRAMEWORK

PART I

ICT IN ECONOMIC GROWTH &

DEVELOPMENT CONTEXT

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SOCIO-ECONOMIC SNAPSHOT: KENYA’S PEOPLE

Source: Ministry of Planning and National Development, 1999 Population and Housing Census, Economic Survey 2003

Kenya (TOTA

L)Spatial Distribution 937100

Nairobi

Rest of Kenya

PEOPLE DATA: Expressed as a proportion of every 100 Kenyans

Living below US$1 a day

52456

Working age population

47552Paid employees 10212Self-employed 261

Unemployed non-participants

11213

“Kids at work” (5-17)

13013

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Life Expectancy 44-645757

Male Life Expectancy

52-6353

Female Life Expectancy

54

48-686060Infant survival probability past 1 year of age

64-899592

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SOCIO-ECONOMIC SNAPSHOT: KENYA’S HOUSEHOLDS

Source: Ministry of Planning and National Development, 1999 Population and Housing Census

Kenya (TOTA

L)

Nairobi

Rest of Kenya

HOUSING DATA: Expressed per 100 households in Kenya

9010100

Rooms per house (average)

1.71.61.7People per room (average)

2.722.6Houses - 3 rooms or more

432

Self-Owned Houses 70272

Rented Houses 10818

45

Makuti, Grass, Tin Roof

30-30

Wood, Earth Floor 6264

Mud, Wood, Grass Wall 56157

252355

Pond, Dam, River, Well Water

Spatial Distribution - Households

85590Pit, Bucket, Bush Sanitation 78896Paraffin, firewood, charcoal

cooking 80585Lantern, lamp, wood lighting

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Figure I.1: National Gini Decomposition by Source of Consumption Inequality, Kenya 1997

Own food

Own maize

Own milk

Purchased food (34% of total consumption)

Purchased maize

Sugar

Purchased milk

Non durables

Entert.Water

Fuel

TransportHealth

Pers. care

Clothes, shoes

Education

Insurance

Education

Rent

Durables

Tobacco0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

Gini Elasticity (GkRk/G)

Shar

e of

Per

Cap

ita C

onsu

mpt

ion

(Sk)

INEQUALITY-REDUCINGCHOICES: WHITHER ICT?

Source: World Bank. A Policy Agenda for Growth, August 2003

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ICT IN ECONOMIC GROWTH CONTEXT

ECONOMIC GROWTH is measured as the sum of• MORE CAPITAL• MORE LABOUR• BETTER TOTAL FACTOR PRODUCTIVITY

POINTER 1: STUDIES SHOW THAT ICT KEY CONTRIBUTION is• MORE CAPITAL (Equipment,Infrastructure, Software Assets) and not• BETTER TOTAL FACTOR PRODUCTIVITY (Productivity Paradox)• ICT ESTIMATED AT 0.3-0.9% of 3-4% OECD late1990’s GROWTH

POINTER 2: STUDIES ALSO REVEAL• LOCAL ICT PRODUCTION not as ICT DIFFUSION• ICT GROWTH LIMIT IS IN RAPID ASSET DEPRECIATION• SOME ICT GROWTH EFFECTS RESULT FROM REPLACINGOTHER FORMS OF CAPITAL

PART II

ICT IN KENYA’s GROWTH, EQUITY &

POVERTY REDUCTION AGENDA

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Financial Sector FrameworkLand Administration

Information and Communications TechnologyEnvironment and Natural Resources

Regional Development

5 Cross-cutting themes

Stable macro-economicframework

Strengthen institutionsOf governance

Rehabilitate and expandphysical infrastructure

Invest in the humancapital of the poor

4 Strategic Pillars

6 Macro-targets

500,000 jobsper annum

GDP Growth7% in 2007

Poverty down5 per centum

Annual inflationbelow 5% pa

Forex up 2.8 to 3.5

months

Increaseddomesticsavings

5 key growth sectors: Average growth projection during strategy periodBuilding and construction 16.7% pa

Manufacturing

8.6% pa

Tourism5.4% pa

ICT5% pa

Agriculture 3.1% pa

Source: Economic Recovery Strategy for Wealth and Employment Creation 2003

ERSWEC – A QUICK REFRESHER

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ERSWEC – THE PROMISED LAND

Source: Economic Survey 2003, Economic Recovery Strategy for Wealth and Employment Creation 2003, Central Bank of Kenya Monthly Economic Review December 2003

Hist. 5-yr average

2002 actual

2003 promise

ERS 5-yr average

8.6%Manufacturing

5.3%1.2%0.4%

5.4%Tourism 2.7%1.6%1.5%

5.0%ICT N/AN/AN/A

3.1%Agriculture 1.5%0.7%0.3%

16.7%Building & Construction

9.5%0.3%(0.2%)

OVERALL ECONOMY(including other sectors) 4.7%2.3%1.1%0.8%

Real Growth %ages for key sectors

5.3%Finance, Biz Services

2.7%0.7%1.0%

4.8%Elect. & Water

3.2%1.2%NIL

5.0%Trans& Comms

2.4%2.5%2.3%

0.2%

1.2%

2.5%

N/A

1.3%

1.5%

N/A

3.0%

1.4%

2003To Oct

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ERSWEC InvestmentProgramme

FinancingStrategy

Export/BoPStrategyGovt

(Reform)Saving

FDI ODADomesticInvmt.

GovtInvmt.

DomesticSaving

ForeignSaving

THECONSUMPTION

FACTOR?

-Financial Infrastructure- Economic Infrastructure

- Social Infrastructure-Governance Superstructure

Rates ofReturn?

FROM ERSWEC TO IP…TO FINANCING

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SNAPSHOT OF ICT IN THE INVESTMENT PROGRAMME

TOTAL GOK DONOR PSP GAP

Economic Infrastructure 210.3 38.4 16.6 80.8 74.5Social Infrastructure 132.4 37.6 10.1 0 84.7Governance and Productive Sectors 60.3 16.6 1.3 5.1 37.3Wealth Sharing and Poverty Reduction 47.4 13.3 4.3 2.9 26.9TOTAL 450.4 105.9 32.3 88.8 223.4

Telecommunications 0 0 0 0 0ICT Development 1.2 0.7 0 0 0.5TOTAL 1.2 0.7 0 0 0.5

GRAND TOTAL 451.6 106.6 32.3 88.8 223.9

Telecomms/ICT Share of Grand Total 0.27% 0.66% 0.00% 0.00% 0.22%

These data are 4-year estimates presented in Government’s Interim Investment Programme.

Billions of Kenya Shillings

PART III

TOWARDS AN ICT-ENABLED GROWTH &

HUMAN DEVELOPMENT FRAMEWORK

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TOP-DOWN STRATEGICCONTEXT

FOOD FOR THOUGHT

BOTTOM-UP DEVELOPMENTCONTEXT

NATIONAL ICT STRATEGY:

• IS CROSS-CUTTING, NOT SECTOR-SPECIFIC. • HENCE MAINSTREAM WITHIN ALL SECTORS, DON’T MARGINALISE• MUST REFLECT OTHER CROSS-CUTTING CONSTITUENCIES E.G.THEMATIC PRSP GROUPS - GENDER, PASTORALISTS, M&E• REQUIRES A HOLISTIC FOCUS DRIVEN NOT BY LOCATIONS, OR INSTITUTIONS, BUT REAL DEVELOPMENT MEASURES (IS THERE A PRO-POOR NATIONAL ICT STRATEGY OR POLICY)

AT BOTTOM, CAN WE FIND A BALANCED NATIONAL ICT STRATEGY?

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Collechia A & Schreyer P, October 2001. “ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? – A Comparative Study of 9 OECD Countries.” _______.

Central Bank of Kenya, December 2003. “Dec 2003 Monthly Economic Review”. Nairobi. Central Bureau of Statistics. August 2002. “The 1999 Population and Housing Census”. Nairobi Institute of Economic Affairs, 2002. “Telecommunications Policy in Transition: Mainstreaming Kenya into

the Global Information Economy”. Research Paper Series No 2. Nairobi. Institute of Economic Affairs, 2003. “A Quest for National Recovery: Repositioning ICT as a pillar for

national economic growth” – Commissioned Paper (M Mureithi, Summit Strategies). Nairobi. Kenya ICT Federation, March 2004. “From National ICT Policy to National ICT Strategy”. Nairobi. Kenya ICT Federation, March 2004. “Sector-Based ICT Strategies for Kenya: Action Programme 2003-04”.

Nairobi. M Mureithi (Summit Strategies) & K Owino (Institute of Economic Affairs), November 2003. “An Inclusive

ICT Policy Imperative for National Development in Kenya: A Field Survey of ICT Stakeholders”: UNESCO Commissioned Research. Nairobi.

Ministry of Planning and National Development. 2003. “Economic Recovery Strategy for Wealth and Employment Creation 2003-2007”. Nairobi.

Ministry of Planning and National Development. 2003. “Interim Investment Programme for the Economic Recovery Strategy for Wealth and Employment Creation 2003-2007”. Nairobi.

Ministry of Planning and National Development. May 2003. “2003 Economic Survey”. Nairobi. NGO Council, ActionAid Kenya, Institute of Economic Affairs and Christian Partners Development

Agency. November 2003. “Civil Society Issues Paper - Response to Interim Investment Programme”. Nairobi.

REFERENCES

ANNEX

SECTOR-BY-SECTOR COMPARISON OF

ERSWEC,PRSP andINVESTMENT

PROGRAM

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ERSWEC PRIORITY OBJECTIVES• Legal and institutional reforms• Empowering resource-poor farmers through applied research• Improved extension services• Agricultural credit• Cooperatives

SELECTED PRSP PRIORITIES NOT IN ERSWEC ACTION PLAN

1. Improved crop development, including extension services (including PSP) and credit through micro-finance

2. Food Security

3. Improved Local Market Infrastructure to support agricultural livelihoods is not covered by the ERS

4. Research and Development

AGRICULTURE AND RURAL DEVELOPMENT

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NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMME1. Competition and legal reform to reduce the cost of agricultural inputs2. Commercialisation of farm and non-farm products as the means to increasing rural incomes. Possible reduced role for cooperatives?3. Review of laws relating to inheritance of agricultural land as a meansto mainstreaming gender4. Liberalisation of sugar and maize sectors to improve food security5. Liberalisation of pyrethrum sector6. Modelling of coffee sector on tea sector to increase farmer returns7. Support to livestock sector through better disease control, single permits formovement and private sector-owned slaughterhouse network8. Rationalisation of spending on agricultural parastatals9. Private sector participation in rural infrastructure, fisheries, and livestock exports

AGRICULTURE AND RURAL DEVELOPMENT

FUNDING GAP – KShs 17 billion(45% of TOTAL NEED)

4 year NEEDKShs 38 billion

Available GoK Funding – KShs 14 billionAvailable donor funding – KShs 4 billion

Potential PSP – KShs 3 billion4 year FUNDING – KShs 21 billion

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ERSWEC PRIORITY OBJECTIVES• UPE• Support for secondary enrolment in ASAL and poor families

SELECTED PRSP PRIORITIES NOT IN ERSWEC ACTION PLAN1. Early Childhood Development2. Access, retention, completion and attainment at primary level3. Monitoring and control of parent exploitation through rationalised curricula and

control over user charges4. Expansion of bursaries, subsidies (e.g. for exam fees for the poor) and school feeding

(for the poor)5. Provision of school equipment and other materials to day schools6. Encourage PSP in school development7. Non-formal education8. Resource management (Quantitative and curriculum-based P/T ratios)9. Adult education, especially young adults10. Capacity-building for PTAs and School Boards

EDUCATION

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EDUCATION

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMME1. Improve quality and internal efficiency through teacher training and redeployment2. Reform curriculum to focus on core skills, learning materials andlearning environment3. Redefine the role of local authorities in education4. Decentralise decision-making to district and school-level administrators




Potential PSP – KShs NIL4 year FUNDING – KShs 26 billion

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ERSWEC PRIORITY OBJECTIVES• Health

• National Social Health Insurance• Health care programmes for vulnerable groups• Rehabilitation of health facilities and equipment• Overhaul of drugs procurement and distribution

• HIV/AIDS• Reduce prevalence


1. HEALTH

1. Equity, quality, accessibility and affordability of health care, including specific poverty-focused resource allocations to districts

2. Essential package of health services, emphasis on women and children under 5

3. Decentralisation of health services

2. HIV/AIDS

1. Prevention and advocacy 2. Treatment and care of the infected and affected

3. Mitigation of socio-economic impact 4. Creation of improved work environment

HEALTH CARE (including HIV/AIDS)

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HEALTH CARE (including HIV/AIDS)

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMMEHEALTH1. Interim health sector financing strategy prior to social health insurance scheme2. Focus investment on interventions for poor and vulnerable groups3. Improve cross-sectoral cooperation for health promotion4. Establish National Health Sector Strategy5. Increase government spending on health (by 115%)

HIV/AIDS1. Intensify advocacy campaigns2. Coordinate strategies for prevention, treatment and mitigation3. Develop a roll-out plan for treatment and intensify prevention activities





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ERSWEC PRIORITY OBJECTIVES • Increase urban housing• Improve urban sanitation and residential infrastructure


1. Establish national housing policy

2. Establish a mortgage-based securities market

3. Facilitate provision of decent, affordable housing

4. Prolong economic lifespan of government buildings

5. Complete all outstanding, viable building projects

6. Terminate all stalled and suspended building projects

7. Suspend initiation of new government projects except in emergencies

SHELTER AND HOUSING (incl. SLUM UPGRADING)

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SHELTER AND HOUSING (incl. SLUM UPGRADING)

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMME1. Develop slum upgrading and relocation plans2. Construct 150,000 housing units annually3. Complete stalled housing projects4. Provide new tenant purchase housing schemes5. Promote secondary mortgage market6. Invite PSP in construction of low-cost housing

FUNDING GAP – KShs 8.26 billion(96% of TOTAL NEED)

4 year NEEDKShs 8.6 billion

Available GoK Funding – KShs 0.04 billionAvailable donor funding – KShs 0.3 billion

Potential PSP – KShs NIL4 year FUNDING – KShs 0.34 billion

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ERSWEC PRIORITY OBJECTIVES• Civil service reform• Local government reform• Privatisation• Regulation• Competition


1. Improve efficiency and effectiveness of local authorities

2. Creation of a leaner, efficient public sector, with pay reform

3. Enhance economic planning and development administration

4. Strengthen financial management (budgeting, control, monitoring, accounting, audit)

5. Better disaster and emergencies management

PUBLIC SERVICE (excl. SAFETY LAW AND ORDER)

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PUBLIC SERVICE (excl. SAFETY LAW AND ORDER)

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMME1. Cabinet review of viability of 136 state corporations2. Expenditure restructuring

1. Wages and salaries restructuring through retrenchment of 45,000 publicemployees (including parastatals and public universities), delayedimplementation of salary awards and hiring freeze

2. Pensions restructuring through introduction of contributory pensionscheme

3. Debt interest restructuring using privatisation proceeds and liquidationof non-core state corporations

4. Cost savings in goods and services purchases through streamlinedprocurement and better governance

5. Cost savings in Defence/NSIS through restrictions in purchase ofequipment through short-term commercial borrowing

3. Privatisation proceeds are not factored into the financing framework





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ERSWEC PRIORITY OBJECTIVES• GOVERNANCE - Good governance and anti-corruption strategy• SECURITY

• Improved service delivery• Improved welfare for disciplined forces

• IMMIGRATION - Regulate and control entry, exit, residence and citizenship• RULE OF LAW

• Predictable and impartial justice system• Speed up prosecutions to clear backlog• Improve service delivery in civil legislation

• PRISONS - Less congestion and crime (NO ACTION SPECIFIED)


1. Protect national sovereignty

2. Institute offendor rehabilitation programmes

3. Decentralise probation services

4. Gender mainstreaming

PUBLIC SAFETY, LAW AND ORDER

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PUBLIC SAFETY, LAW AND ORDER

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMMEPOLICE1. Implement a framework for cross-border policing and collaboration2. Provide decent accommodation for police3. Establish anti-banditry units4. Comprehensive intelligence research in crime and securityANTI-CORRUPTION1. Cancel all stalled projects (but refer to SHELTER AND HOUSING)

NOTE: Main thrusts from the ERSWEC are retained



Available GoK Funding – KShs 15 billionAvailable donor funding – KShs NIL


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ERSWEC PRIORITY OBJECTIVES• Investment Code• Export Promotion• Tourism – increased arrivals and diversified source markets• Manufacturing – export-focused growth• Medium and Small-Scale Enterprises – Growth and employment creation• Trade policy• Fisheries development• Forestry development• Mining development• Quarrying


1. Enhanced TTI information networks (Industrial Database)

2. Specific internal and external trade strategy

TOURISM, TRADE AND INDUSTRY

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TOURISM

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMME1. Security2. Review of tax structures in tourism sub-sector3. Pro-poor thrusts

1. Foster community-based and eco-tourism in northern and westernKenya, targeted at backpackers and nationals

2. Compensation policy for human-wildlife conflict3. Guidance, credit and incentives to SMEs4. Review park tariffs in less-visited areas5. Restructure KTDC into an investment and SME credit institution



Available GoK Funding – KShs 2 billionAvailable donor funding – KShs NIL


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TRADE, INDUSTRY AND SMEsNEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMMETRADE AND INVESTMENT1. World Bank-GoK trade diagnostic study – to influence trade policy2. New regulatory framework for finance and infrastructure3. Investment authority and investment road map by 2005INDUSTRY1. Liberalise trade2. Deepen financial market3. Facilitate use of technology licenses4. Review mechanisms for wage determination5. Improve access to quality training6. Benchmarking studies of textiles (AGOA?) and sugar (But refer to Agriculture)SMEs1. Strengthen credit institutions, including KIE2. Develop training market for SMEs



Available GoK Funding – KShs 0.8 billionAvailable donor funding – KShs NIL


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ERSWEC PRIORITY OBJECTIVESROADS• Efficient road transportENERGY• Adequate affordable supply (KPLC, Ken-Gen)• Increased oil refinery efficiency• Oil pipeline extension to KampalaWATER• Rural access to water• Sustainable management of water resources

SELECTED PRSP PRIORITIES NOT IN ERSWEC ACTION PLANROADS1. Improved road transport, focus on rural areas2. Road network maintenance3. Reform of Mechanical and Transport Dept operationsENERGY1. Rural access2. Diversified energy sources3. Reduced dependence on imported petroleumWATER1. Improved access to water and sanitation, especially poor and vulnerable groups2. Increased coverage of urban sewerage and sanitation

ROADS, ENERGY AND WATER

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ROADS, ENERGY AND WATERNEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMMEROADS1. Road inventory and condition survey2. Conventional tolling for 1,208 kms of Northern Corridor. 3 concessions – (1) Mombasa

-Machakos (2) Machakos-Rironi (3) Rironi-Malaba via Eldoret and to Busia viaKisumu

3. First concession – Machakos-Nairobi under BOT4. Rehabilitate 2,805 km5. Reconstruct 150km roads per annumENERGY1. Create Rural Electrification Authority2. Increase rural electrification penetration from 4% to 40%3. Develop framework for solar powerWATER1. Increase fresh water resource availability by over 250% by 20072. Rehabilitate 600 rural water schemes by 20063. Rehabilitate and hand to communities 100 dams per year4. Drill and hand to communities 500 boreholes per year





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ERSWEC PRIORITY OBJECTIVES• RAIL

• Develop an efficient railway (Kenya Railways) and sell gulf marine services• MARINE

• Develop efficient marine transport• Replace ferry service at Likoni with Dongo Kundu bypass

• AIR• Improve and strengthen management and operations to ICAO standards• Increase handling capacity of regional airports• PSP in airports management

• PORTS• KPA as a landlord port, with outsourced services


METEOROLOGY

• Improved efficiency and capacity of meteorological services

RAIL, MARINE, AIR, PORTS AND MET

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RAIL, MARINE, AIR, PORTS AND METNEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMMERAIL1. New legal framework for PSP in rail2. Kisumu line upgrading3. Thika-Nanyuki line relaying4. Nairobi-Mombasa mainline spot rehabilitation5. Joint concessioning of KR and Uganda Railways? KR Staff retrenchment?AIR1. Achieve FAA/ICAO Category 1 rating2. Relocate domestic terminal to old airport at Embakasi3. PSP in airport management and financingMARINE AND PORTS1. KPA as a landlord port2. Privatise all KPA inland container terminals (Nairobi, Kisumu, Eldoret)3. Purchase 2 new ferries for Mombasa




Potential PSP – KShs 43 billion4 year FUNDING – KShs 44.4 billion

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ERSWEC PRIORITY OBJECTIVES • Reliable, efficient and affordable communications (Telkom Kenya)• Improved public access to information


1. Strengthen ICT capacity to support core government functions

2. Support communications workflow processes and service delivery

3. Facilitate information management and sharing

4. Stimulate and support the nation’s participation in the global economy

5. REDUCE THE DIGITAL DIVIDE

TELECOMMS AND ICT

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TELECOMMS AND ICT

NEW THRUSTS INTRODUCED IN THE INVESTMENT PROGRAMMETELECOMMS1. East cost submarine cableICT1. Countrywide ICT awareness campaign2. ICT skill enhancement campaign3. E-government initiative – centrally, then to districts



Available GoK Funding – KShs 0.7 billionAvailable donor funding – KShs NIL billion

Potential PSP – KShs NIL billion4 year FUNDING – KShs 0.7 billion

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but ignores the following thematic groups from PRSP

1.Gender

2.Disabilities

3.Youth

The ERSWEC and IP identifies special interest groups as:• ASALs/Pastoralists

THE CASE OF SPECIAL INTEREST GROUPS

NATIONAL ICT CONVENTION 23-25 March 2004

Documents

Transcript of NATIONAL ICT CONVENTION 23-25 March 2004